Medicare physician payment for practice expense: is it refined? Part 1. Office visit reevaluations

To analyze the Medicare physician fee schedule practice expense payments, focusing on the 2001 changes for office visits, and to estimate the impact of these changes.

We analyzed the source data posted on the Health Care Financing Administration Web site to quantitate the changes in the office visit payments, the impact on Medicare payments by specialty, and the details of the office visit direct cost input changes.

The 2001 office visit changes result in a redistribution of $600 million per year in Medicare payments away from cognitive services. Specialties that depend on such services for major portions of their incomes are adversely affected. Family physicians lose about $65 million per year and internists about $74 million per year in Medicare income alone.

This substantial physician income redistribution was made with little advance notice, raising questions about its lawfulness. The volume of data needed to understand the practice expense changes and the rapidity with which changes are implemented highlights the usefulness of the Internet in disseminating information about these activities that critically affect physician practice.